Managing risk and turbulence may set the tone for 2026

If 2025 was heady — with the price of gold soaring from $2,607 to $4,315 per ounce, as a weakening dollar and expectations of negative real interest rates fueled its rally — then 2026 is likely to be defined by turbulence and geopolitical risk too.

The United States, a torch bearer of the free market, has abdicated that title. It doesn’t like that it buys more goods from other countries than it is able to sell to each of them. So countries with trade surpluses have been made targets for higher taxes.

Countries at the receiving end have since been out to look for a better deal. They appear to be trying to deepen ties with everyone else in favour of a beneficial trade.

Instability at times can be the order of the day.

A US Supreme Court decision had earlier declared that US President Donald Trump’s tariff decisions were illegal. That decision was followed with this question by Trump on social media: “It doesn’t make sense that Countries and Companies that took advantage of us for decades, receiving Billions and Billions of Dollars that they should not have been allowed to receive, would now be entitled to an undeserved “windfall,” the likes of which the World has never seen before, as a result of this highly disappointing, to say the least, ruling. Is a Rehearing or Readjudication of this case possible???”

How is year 2026 likely to fare?

India’s Economic Survey released in February had offered three scenarios for 2026 as guidance: in the best case, business is usual. Financial stress episodes may appear but they lead to volatility that require governments to intervene to stabilise expectations.

In the second scenario, strategic rivalry may intensify. In which case policy becomes nationalised, and countries face sharper trade-offs between autonomy, growth and stability. The third scenario, with a probability of 10-20 per cent, involves a systemic shock in which financial, technological, and geopolitical stresses amplify one another rather than unfolding independently.

Investment in AI infrastructure, globally, is leveraged on optimistic execution timelines, narrow customer concentration, and long-duration capital commitments. Notes an MIT Nanda report, researched between January and June 2025: “Despite $30–40 billion in enterprise investment into Generative AI, a surprising result in that 95 per cent of organisations are getting zero return.”

Geopolitics has had an impact on supply chains. What it hasn’t affected so far (for the worse) is the price of crude oil, which in the past has been a primary source of economic turbulence for India. Cheap oil has kept India’s inflation under control.

Year 2026 is likely to continue with other forces in motion. Businesses are constantly evolving. Car companies are moving from petrol and diesel engines to electric batteries. Drug companies are using AI to discover new medicines. Logistics companies are adjusting to changes in global supply chains. Manufacturers are adapting to robots and 3D printing. Service businesses are starting to use AI tools to do tasks.

“It was no longer enough to deliver just-in-time; we had to also factor in for just-in-case,” notes Nandan Nilekani, chairman of Infosys Technologies.

A FICCI-EY risk survey highlights the main risks affecting organisational performance. Respondents to its survey ranked cybersecurity breaches at the highest, followed by changing customer expectations, geopolitical events, regulatory change, economic challenges, and workforce issues. Emerging technologies, climate change, and natural constraints are listed after them.

In times of change, businesses adjust: for strong, lasting companies are built during periods like these.